Not every aspect of economics has to be wrong in order for your preferred economic theory to be correct.

It’s hilarious how socialists/communists/idiots will disagree with anything and everything about economics, as if they “win” by default if economics is wrong. Yet they fail to realize their own theories would fall apart too if they deny even the most basic building blocks. Marx’s theories of exchange are also based on the principle that people trade on this basis of mutual benefit. His theories of exploitation don’t rely on workers being so stupid that they don’t realize they’re trading their labor for too little; his theories rely on the idea that they simply can’t get as much as they’re worth because of the capitalists’ power.

I’ve had self-described Marxists tell me that capitalists always collude and competition never drives down profit rates. The guy didn’t realize Marx’s whole theory of economic crisis is based on the idea that capitalists drive drown profits through competition.

But I can come up with an infinite number of models that generate extreme inequality. Here’s one:

Flip a coin. Comes up heads, all wealth ends up with DontManuel. Comes up tails, nothing happens. Repeat until all wealth ends up with DontManuel.

The question is whether this model mimics reality in any way. Is there any reason to believe actual economic processes operate in this way or generate inequality in this way?

The problem isn’t even that it’s unrealistic. The problem is that the rules of this Yard Sale Model are so painfully contrived to generate extreme inequality that it doesn’t actually even yield any insight into anything. Of course if you make trade 1) random; 2) not mutually beneficial; and 3) trade is done as a fraction of wealth, then eventually some end up with everything.

Perhaps there’s some analogy here to entrepreneurship in select zero-sum contexts, where there can only be a few winners, past winners are more likely to win again, and most people lose. But then I have no idea why this is called the “Yard Sale” model.

How does this Yard Sale Model represent economic activity?

This Yard Sale Model involves people randomly pairing up and randomly exchanging wealth in a way that one person is always the loser and one person is always the winner. The model shows people flipping a coin and then trading a fraction of the others’ wealth.

How does that mimic trade? In voluntary trade, people are engaging in mutually beneficial trade exchange. I trade you my tchotchke for $5 because I value $5 more than my tchotchke; you do it because you value my tchotchke more than $5. Neither of us walks away “poorer.”

This is the kind of stupid stuff physicists come up with when they try to do economics.

I wouldn’t be so sure. High earners are concentrated in very expensive cities and may be saddled with lots of debt (student, mortgage, car, etc.) And unemployment insurance payments are capped.

To the contrary, we should wonder why so many societies felt it necessary to torture people in such terrible ways.

We look back on this now from our relatively peaceful, safe, and wealthy lives. But these things happened at a time when something as simple as a band of thieves operating on a highway could mean death for those who get robbed, starvation of those victims’ families, and a mini-recession for the towns whose main trade route was disrupted.